ALGEBRA

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Calculate the monthly finance charge for the following credit card transaction. Assume that it takes 10 days for a payment to be received and recorded and that the month is 30 days long. (Round your answer to the nearest cent.) $500 balance, 20% rate, $50 payment, previous balance method
HELP!!

  • ALGEBRA -

    What are they asking you to calculate?

    All you have said is the amount of the payment, the balance and interest rate, and that they use the previous balance method.

  • ALGEBRA -

    Well that is the question.I really do not know.

  • ALGEBRA -

    ok I came up with I=Prt =500(.20)(1/12)=$8.30 is this correct.

  • ALGEBRA -

    If what they want is the finance charge in the next billing cycle, that will be $450 * (0.20)/12 = $7.50

    For the billing cycle of the current bill, the finance charge depends upon the previous unpaid balance. If that previous balance was $500, then your calculation is correct.

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